Last month was our household’s car insurance renewal time. For the previous year, we had paid just over £500 to insure the only car in our household. When the renewal arrived in the post, we were shocked. The same insurer wanted over £1000 for the year, even though we now had another year of claim-free motoring.
I was outraged. I quickly went to the various car insurance comparison sites in the UK. And what I found there was even more shocking. Some of the best-known insurance companies wanted premiums of over £3000. This is scandalous for a family that doesn’t drive many miles and whose car is kept at home for much of the day.
And I found out it wasn’t just me who was affected by these outrageous prices. A friend of mine was quoted over £4,000 this year when he had been paying less than £800.
Why Has Car Insurance Gone Up So Much?
According to the Association of British Insurers (ABI), insurance premiums for 2024 are, on average, 25% more expensive than they were in 2023. They blame “a sharp rise in the cost of claims often at prices higher than inflation”.
According to the ABI, the high energy cost has had a knock-on effect on vehicle repairs and claims costs. They quote:
“The cost of vehicle repairs jumped 32%, with the cost of paint increasing 16%, spare parts up 11% and the cost of replacement cars increasing by 47%”
But this absolutely does not explain how motor insurance has doubled or tripled in price.
Shopping Around May or May Not Help
At a time, car insurance comparison sites offered relatively big savings for the average customer. If you found a more competitive quote than your current insurer, they would often match it. These days seem to have gone. All the big comparison sites seemed to have the same massively inflated quote—although some were more ridiculous than others.
One quoted an 800% rise on last year’s premium. Quite how they could justify that insane price is anyone’s guess. I’d love to see the ABI explain that one with their facts and figures.
Is There Anything I Can Do To Bring Down the Cost of My Car Insurance?
Keeping the car in a locked garage at night (which, of course, may not be possible for many people) will reduce the chance of theft and should theoretically lower premiums. Choosing a higher voluntary excess will help a little, although this will be of little consolation if you pay out more in the event of a theft or accident.
Some insurers ask for your driver’s number when calculating premiums. This will allow them to check your driving history and ensure you have no undeclared convictions for motoring offences. A clean driving record, as well as limiting the number of miles you drive in a year, should help bring down the premium.
Choosing to pay annually rather than monthly will lower the overall cost. If you cannot afford to pay for your premium in one go, a 0% interest credit card can be useful for spreading the cost. But don’t be tempted to put it on a regular credit card, as the cost of interest might be more than the cost of the credit on a pay-monthly agreement.
Some Good News for Pay Monthly Insurance Policies?
If you pay monthly for your insurance, there may be some good news on the horizon. In April 2024, the ABI members committed to a new agreement to help people manage the amount they are paying under credit agreements.
The new rules will bring more transparency to credit agreements. Insurers will need to ensure that any pay monthly agreement is reasonable, fair value, affordable and proportional.
This aims to reduce the amount that people pay in the current cost of living crisis.
It seems that these measures are coming too late for many people. The scandalous cost of insurance premiums has put massive pressure on many families who need a vehicle for everyday living. As energy prices finally fall, it remains to be seen whether the increase in premiums was due to the energy crisis or whether insurance companies have become a law unto themselves.
Have you been quoted a huge car insurance premium for the coming year? Let us know in the comments below.
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